My telegram G. No.29.  Commercial Policy.
We have now received the United States recommendations as to revised programme for international discussions. These recommendations are designed to deal with difficulties arising from delays in passage of the United States loan. The United States administration consider it inexpedient until the loan is through to give go days notice required by their legislation of intention to enter into tariff negotiations. On the other hand, they tell us in strict confidence that they do not wish to give such notice subsequently before their elections in November.
Notice, therefore, cannot be given until the middle of November which means tariff negotiations cannot start until about March 1947. The United States Government suggest the following timetable:-
(a) 1st July to 15th August. Meeting of preparatory committee of Economic and Social Council in New York to begin work assigned to it by the Council and to discuss United States proposals on genera' exploratory basis without necessarily aiming at definite agreement and without any detailed tariff bargaining.
(b) August 15th to October 15th. Meeting of drafting sub-committee also in New York of five or six members of preparatory committee to draw up detailed charter for International Trade Organisation in light of views expressed during (a).
(c) March 1947. Second meeting of preparatory committee to coincide with meeting of original 'drafting countries' and to consider draft charter simultaneously with tariff negotiations.
2. We see the following disadvantages in this programme.
(a) it has always been a cardinal point of tactics with us not to be drawn into anything like commitments on non tariff questions ahead of detailed negotiations of tariffs. We hold to the view that it is of great advantage to us and we assume to the Dominions also that negotiations on the Charter of I.T.O. and non tariff questions should proceed simultaneously with tariff negotiations.
(b) We, therefore, see strong objections to a proposal [to] set up drafting committee of the preparatory committee of Economic and Social Council and consider that Governments would have to make repeated reservations in connection with drafting of Charter until they knew to what extent tariffs were likely to be reduced.
(c) We doubt whether we or other countries could spare manpower for long period involved in the latest United States programme.
(d) We are not prepared to enter into negotiations which publicly commit us on commercial policy until we know the United States loan is through which will probably not be before July.
3. on the other hand we do not want flatly to reject the United States programme. We agree with the Americans that some action is necessary this year in order to prevent interest evaporating. If no progress is made, either the preparatory committee or Economic and Social Council itself may feel called upon to intervene and disturb the careful balance of proposals agreed with the Americans. Also a meeting this year would provide a useful opportunity for discussion with foreign countries that are less familiar with many of the proposals and for ascertaining what differences of view exist.
4. We, therefore, propose to reply to the United States Government on the following lines. We share their desire to keep interest alive until tariff negotiations take place next March and we, therefore, see advantage in a meeting of the preparatory committee (which would last about four weeks) for purpose of exchanging views, removing doubts and explaining intentions of United States proposals and enlisting support for them. On the other hand, we oppose the appointment of a drafting subcommittee for the reasons explained in 2 (b) above. We consider July to be too early for a meeting of the preparatory committee because the fate of the loan may still not be known and we think the Governments concerned ought to have six weeks notice before the meeting of the preparatory committee starts. We think, therefore, that a decision on the date of the meeting of the preparatory committee should be deferred. Provided Congress has acted in time, the aim should be to hold a meeting of the committee in early autumn preferably in London or Geneva (we think this would probably mean October rather than September to avoid a clash with the General Assembly, U.N.O.
and Economic and Social Council meetings).
5. If the Americans accept our views on timetable, there would remain the question of fixing dates for prior British Commonwealth discussions. We assume that Dominion Governments would share our view that if negotiations on tariffs with foreign countries are to be postponed until March it would be preferable also to postpone say until January, British Commonwealth discussions on tariffs and preferences. We think, however, that there would be advantage in holding a separate British Commonwealth meeting for preliminary discussions of all questions other than tariffs and preferences which will come up at meeting of preparatory committee in October.
We understand that it will not be convenient to the Australian or New Zealand Governments to hold such a meeting in August or September and we therefore suggest that we should adhere to the date previously suggested i.e. July 1st. If nearer that date loan prospects still seem highly doubtful, reconsideration of the date of the British Commonwealth meeting would be necessary.
6. We shall be glad to learn whether the Dominion Governments agree with the line we propose to take in reply to the latest United States suggestions and with our proposal that subject to satisfactory developments in regard to the United States loan, the British Commonwealth meeting should take place on July 1st for discussion of commercial policy questions other than tariffs and preferences. We should be grateful for a reply by 15th May.